2 Ways The Internet Lies To First Time Homebuyers

First time homebuyers tend to love me, and I love them.  They enjoy working with me because I make sure that all of their questions are answered.  I love them because - well - they're just FUN.  They're excited, they're nervous, they're dreaming big dreams....who wouldn't love being a part of that?

There's typically a lot that these first time buyers don't know about the home buying process, but that's ok.  We normally sit down together for a one-on-one Homebuyer Education Meeting before they make an offer on their home to make sure that they know the important things that will make that purchase go more smoothly.

Many times, though, these buyers come into our Homebuyer Education Meeting with some inaccurate information in their heads, information that they typically found online.  Here are two common ways that the internet often lies to the first-time homebuyer...

Misleading Mortgage Calculators

Did you know that the term 'mortgage calculator' is the most commonly searched term involving the word mortgage?  It is...by a landslide.  First time homebuyers understandably want to know how much a home is going to cost them each month so they hop online looking for that answer.

While a first time buyer can easily find a mortgage calculator online and get that payment estimate, it's likely that  the estimate will be missing some pieces.  A mortgage payment typically includes an escrow piece that collects extra money each month and then sets it aside in a savings account for the annual home insurance bill and the property taxes.  Online calculators often don't include that part.  If they do, they typically make inaccurate assumptions on what the cost for insurance and taxes will be. 

The calculators also typically exclude the monthly mortgage insurance.  Mortgage insurance is typically charged each month as part of the payment if a buyer isn't putting 20% or more down on the purchase.  This piece can add up to 15% of the monthly payment, depending on the loan type, so leaving it out can significantly misquote the payment amount. 

Inaccurate Sales Data

The internet is full of housing information these days and many first time homebuyers think it's all accurate.  Bad news guys - It's not.  Most of the sales data found online is outdated at best.  If a first time buyer uses it to gauge how much a home costs in their desired neighborhood or to decide if a home they like is a good deal, they're setting themselves up for disappointment again.  That information is not reliable.

Reliable information comes from a licensed Realtor.  Realtors (and ONLY Realtors) have access to the Multiple Listing Service (MLS) which houses all of the historic and recent real estate sales data.  A Realtor can quickly and easily let the first time homebuyer know what things are really selling for in the area they like and can help them make an informed decision on the fair price to pay for that first home. 

Bottom Line - Talk To The Professionals

Please don't get me wrong.  I love the internet.  The wide array of information found online can definitely benefit a first time homebuyer who is eager to learn.  When it comes to the details of the mortgage financing or the values of targeted homes, though, buyers need to get with the experts.  Find a lender you trust, find a Realtor you trust, then talk to them about your payment and location goals to get quality, accurate information.  You'll be glad you did. 



Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

Why I Love Single Female Home Buyers

My home buyers come in all ages and stages, and I get enjoyment from all of them, but I have to admit that I probably like working with the single female home buyers the best.

Why do I love them so much?  In my experience, I've found that single women:

• Have done their math.  The ladies who are ready to take the step into home ownership on their own have typically thought the process through thoroughly.  They have studied their personal budget in depth before they ever meet with me, and they aren't going to buy beyond what they can comfortably afford.
• Are comfortable with asking questions.  If they don't know something, these ladies don't feel like they need to pretend that they do.  They ask.  If it doesn't make sense the first time, they ask again and again if needed until they feel that they truly understand the information.
• Share the emotion of the purchase.  Single female home buyers are often excited, nervous, hopeful, and terrified - sometimes all at once.  They feel these things, they're not embarrassed by it, and they bring me in on the experience with them.
• Want to learn.  I'm a teacher at heart, and my single female buyers often are the best students a teacher could have.  They care about the subject matter and invest the time in listening and learning all that they can.
• Have no patience for being talked down to.  If a Realtor, home inspector, insurance agent or mortgage lender treats them like they aren't equipped to buy a home because of their age or gender (or both), they're done.  No punches will be thrown, but no sales will be made either.  I love that.

A recent study found that single women buying homes currently outnumbers single men buying homes two to one.  Many causes are attributed to this - better educations, higher paying jobs, etc.   Regardless of the 'why' behind it, I love that single women and becoming more interested in owning homes of their own.

If you are a single woman considering a home purchase or you have one in your circle of family and friends, I want to help.  The solo female buyer can feel confident that they will get respect, education, and a sharing of the excitement from me as they embark on this exciting step.

So....come on ladies!  Let's buy some real estate :-).


Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

The Most Frustrating Piece

After years in the mortgage industry, I've noticed that one piece of the loan approval process consistently causes frustrating for home buyers.  Here's a summary of what it is and how a buyer can minimize the frustration caused by it.

Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.

Turning Your $2,900 Tax Refund Into $194,417

I'll admit it, I'm HORRIBLE about pre-spending my annual tax refund.  I don't actually spend it before February but I typically have a specific plan for that money months and months before it ever arrives from the IRS.

Typically it goes for something reasonable like paying off a debt, shoring up some savings or replacing something that needs replaced.  All of those are valid, good uses for my refund, but none of those uses help me out long term.  None of those uses set me up for a more stable financial future.

But what if your tax refund could?  What if you could take a $2,900 tax refund and, over time, convert it into $194,417?

Let's Buy A Home!

You could do exactly this if, instead of frittering your refund away, you invested it in a home purchase.  Let me share the details with you.

To buy a home with a FHA mortgage, you need 3.5% of the homes price as a down payment.  There are also costs involved with getting the loan and covering your first year of insurance, tax escrows, etc. but you can normally negotiate for the seller to cover those for you.  By having the seller cover those, your $2,900 tax refund will cover the entire down payment needed on a $82,850 home. 

Yes, There Are Ownership Costs....

Of course, there will be a monthly mortgage payment that goes along with that $82,850 home, but it is likely similar to or less than your current rent.  The estimated mortgage payment on an $82,850 home right now is $650 per month, give or take a bit depending on the interest rate, property tax costs and home insurance costs.

This $650 should cover the mortgage payment, but you will need to plan for other costs as well.  Utilities will be covered by you as will maintenance and repairs.  People tend to forget about these last two pieces when dreaming about home ownership and you really shouldn't. Things will break.  It's part of life.

If covering the cost of future repairs concerns you, you can ask the seller to buy a one year home warranty for you up-front that will cover many of those costs in the first year if they arise with you just paying for a small service call fee.  This gives you a year to get comfortable with the home and get a feel for what might break in the future.  At the end of that year, you can renew the warranty at your own cost if you wish. 

But, OH, the return!

 So yes, there will be reoccurring care costs with owning a home and you will likely need to invest your entire tax refund into it upfront, but OH, the return it will give you!  You see, every year, your home value increases.  Certainly, there are years and economic cycles where home values dip but when viewed long term, you can reasonably expect an increase in your home's value. 

To be conservative, let's assume your home goes up in value 3% each year (last 15 year average was 4.2% per Zillow).  Each year you are also paying the mortgage down.  After 30 years, you will have the mortgage paid off and - assuming that 3% increase each year - your home will be worth $194,417.

Is that right??  Yep, that's right.  By investing your tax return now and paying a mortgage payment instead of wasted rent, you will build an asset that will not only provide you shelter but, 30 years from now, will be worth almost $200,000 if you chose to sell it and move to Cancun. 

Not For Everyone, But Maybe For You

Truly, home ownership is not for everyone.  Many people have no cushion in their budget to cover the occasional repairs that come up, even with a home warranty in place.  Some people are not going to stay in the area long-term so the magic of time won't really work for them.

For many people though, home ownership makes perfect sense.  The 2010 median net worth for a renter in America was $5,100 while the median net worth for a home owner was $174,500.  The value of the home itself is a large reason for this. 

So, you have a choice.  Pay down the credit card, buy the bigger TV or invest in an asset that will start you on a path to greater wealth and security.  Which makes more sense to you?




Lori Hiscock is a Sr. Loan Officer at Ruoff Home Mortgage‘s South Bend office.  One of Michiana’s top mortgage loan officers, Lori started her lending career in 1995 after obtaining her bachelor’s degree in Finance from Western Michigan University.  You can connect with Lori Hiscock or apply online here.